The Creating Wealth Show Blogcast

If you were starting out in real estate investing today, which direction would you go? At Platinum Properties Investor NetworkTM, we believe that income properties are a great way to start, but another alternative to consider is a mobile home park. When we say mobile home, we mean either a traditional trailer or manufactured home.

The voracious demand for affordable housing and financing is likely to keep the demand rising into the future. Some people consider a mobile home park the closest thing you’ll find to a gold mine. So, should you buy every one you come across? Probably not. You’ve got to have some standards but here are reasons we think this is an excellent strategy.

With environmental paranoia running at a fever pitch, it’s getting harder to develop a new park. Think zoning, environmental issues, inspectors – then once you’re ready to throw the gates open, you start out with 100% vacancy.

The positive side of this is it makes existing mobile home parks that much more valuable. Why do we call it a gold mine? First of all, you’ve got an income producing asset already in place while local and national bureaucrats (through excessive regulation) are working tirelessly to prevent any competition to enter the area. Does it get any better than this? Not hardly but you still need to do your proper research. Don’t snap up the first deal to come along. Our expert counselors will be glad to talk to you about the kind of investing that really works. Please call 714-820-4200.

In the Gold Rush days, the slogan was “California or Bust!” But now, as the Golden State faces yet another year of its historic drought, “Leave California or Bust!” may become the new rallying cry for the people and enterprises facing a waterless future. And that, say real state experts, could change the US housing landscape forever.

The entire state of California is under drought conditions ranging from “abnormally dry” to “extraordinary drought,” which trumps even “extreme drought” in severity. The drought has been going on for so long that not even heavy rainfall has made a dent in the statewide shortfall.

If you live in greener climes, it may be tempting to dismiss the crisis as just California’s problem. It is partially self-inflicted: the state is home to over 1400 golf courses, which are draining aquifers faster than they can be replenished. The residents of Palm Springs alone use over 700 gallons of water per person per day. Fracking, Disneyland and the state’s love of water parks may be as much to blame as climate conditions.

But regardless of the causes, the effects of California’s drought ripple out into the rest of the country and the world. California is America’s little known agricultural breadbasket, responsible for providing over two-thirds of the country’s fruits and veggies, and nearly a hundred percent of its walnuts, pistachios and other nuts.

Those crops require a lot of water – nearly 5 gallons to bring a walnut to your table. Extended drought means fewer crops brought to market and at much higher prices, with shortages of staples like lettuce and tomatoes in some markets around the country.

In order to stay profitable, agriculture concerns and other businesses may have to seek out greener, wetter locations in order to stay profitable. Moving these businesses out of California and into less populated areas of the South and Midwest could lower costs and keep profits up for years to come.

And if major businesses and industries leave California, their workers will follow. Some real estate and environmental experts are predicting mass migrations out of California, not just by corporate entities but individuals too, driven by persistent shortages and skyrocketing water prices.

That, some fear, could trigger a real estate collapse in the Golden State that would affect housing prices and demand at all points of the spectrum, from low end inland communities to high priced luxury homes in places like the Bay area, Bel Air and Palm Springs.

Drought conditions driving people out of the state are likely to discourage new residents from moving in. Property values could plummet, even in the priciest markets. Some market watchers predict a massive wave of mortgage defaults and foreclosures similar to the situation that triggered the last big housing collapse back in 2008. California’s economy could crash, with repercussions not just for the state but also for the US economy as a whole, given the state’s high population and concentration of large corporations.

Crisis for some can mean opportunity for others. The Western states near California might not reap much benefit from a large-scale migration out of California, though. Those states - Arizona, New Mexico and Nevada in particular – have their own water problems to face, and they may face a fate similar to California’s in the not too distant future.

But California’s troubles could breathe new life into smaller markets in the South, East and Midwest as its businesses and residents shift eastward. As a recent article from The Natural News points out, California could lose up to two thirds of its population as its supply of sustainable water shrinks.

That could create both a housing crunch and a housing boom in other areas of the country, as limited supply meets increased demand. There’s already a shortage of available housing for purchase in some areas of the country, and prices are rising, making some real estate experts worry about the formation of another housing bubble that could collapse at some near future date.

The ‘California effect” could complicate that scenario as new migrants create more competition for available properties. But for investors who take Jason Hartman’s advice to diversify holdings in as many markets as possible, the coming demand could create new opportunities in the form of a bigger tenant pool and higher ROI on rental properties.

It’s too early to predict the actual outcomes of California’s stubborn drought. Still, savvy investors hoping to build wealth in real estate may find gold in the coming rush - away from those hills.

Is the red-hot rental market getting ready to cool down?

The US housing market continues to recover, fueled by promising numbers for employment and other consumer sectors. But major shifts in the housing landscape may be changing all that, as the balance tilts between renting and owning houses in 2015 and beyond.

The devastating crash of 2008 that left the housing sector in tatters and created conditions for dramatic changes in the way Americans choose and maintain places to live. When a combination of reckless lending and unprepared buyers led to large-scale mortgage defaults and foreclosures, the effects were felt throughout all aspects of the housing industry.

Among these effects: shortages of available houses to buy, tougher mortgage lending standards, and a boom in the rental market. Now, though, the consequences of all these things are tipping the balance in the housing market again – and that may mean changes in strategy for investors building a portfolio in rental income property.

Though the housing market began to recover in 2009 and beyond, home buying stayed relatively flat – but rental demand began to surge. A sluggish economy with an uncertain job outlook meant that homeownership was out of the question for many people. Not only that, in the aftermath of the housing crisis new lending standards imposed by the government made it more difficult to qualify for a mortgage.

What’s more, there were fewer houses available to buy. Construction of new dwellings ran behind demand, and exiting homes were either tied up in foreclosure proceedings or auctioned off in bulk to international investor consortiums. American home buying fell to its lowest levels in over two decades.

But for all these reasons and a few others the rental market was heating up. Those who couldn’t qualify for houses or who hose not to buy for reasons both personal and economic were seeking out rentals in markets across the country. And as demand increased so did rents.

But now, according to new data from the giant real-estate database Zillow and reports from other industry watchers, the rental market may be hitting its limits. In markets large and small, two trends may be responsible for the lowdown.

Rents have been steadily rising in the years after the crash, until in some markets they’re currently at or near record levels. That’s not just in high end high demand areas like Los Angeles and New York – it’s a trend in mid range and smaller markets too. And while local and state laws may put caps on the amount that landlords can raise rents in a given year, property owners can keep raising rents within those parameters.

In previous years, that might have been a self-defeating tactic for the landlord/entrepreneur who wanted to keep a property rented. Tenants could always choose to move rather than pay the increased rent.

But now, there’s a shortage of rental dwellings in many markets. The decline in homeownership and the increased demand for rental housing means that tenants are to an extent captive audiences, forced to pay whatever rent their landlord imposes because there’s no place to move.

That’s partly because of a surge in home buying by international investors with cash. In a move similar to the one that contributed to a shortage of homes for purchase after the housing crash, these groups are buying up single-family homes and complexes.

Though new stats reported by Zillow show that for many people, owning a home is half as expensive as renting, some renters who could buy a home are choosing not to – perhaps spooked by the specter of the housing collapse. Still others may be ready to take the plunge into home ownership – if they can meet down payment and credit requirements.

What does all this mean for investors working to build wealth in income property, as Jason Hartman recommends? The slowdown in home buying means more properties available for investors to purchase. And that means new opportunities to meet the continued demand for rental housing from a tenant pool that isn’t shrinking.

Time was, anybody who wanted a safe and anonymous hideaway for financial assets turned to offshore banking. Swiss bank accounts and offshore havens in places like the Cayman Islands allowed depositors both legal and not so legal a way to safeguard assets from risks of taxation or seizure by the home government. But as new and proposed laws threaten to eradicate that privacy, real estate investing remains the only really private way to safeguard assets abroad.

Offshore banking has always offered big benefits to foreign accountholders: privacy, security and access to other currencies and marketplaces. Until recently, account information was highly private.

But now, that privacy may be fast becoming a thing of the past. The Foreign Account tax Compliance Act, or FATCA, is a US law enacted in 2010 to require US citizens anywhere in the world to report any financial accounts held outside the US to the IRS. That’s reason enough for foreign account holder to worry – but FATCA goes much further.

In addition to requiring individuals to report all their accounts held in foreign banks, FATCA also requires foreign financial institutions to report information about accounts held by their US clients to the IRS as well.

The move makes it much harder for individuals to hide assets from taxation, and for businesses to use “shell corporations” to conceal revenue. Though the law has been widely criticized as an attack on financial privacy, between 2012 and 2014 FATCA was ratified by a long list of countries large and small, including the major players in offshore banking, Switzerland and the Cayman Islands.

FATCA has stirred controversy not just because of its potential attack on financial privacy, but also for what critics call “bullying” of other countries into compliance. What’s more, the law is seen as the next step toward a policy of stripping everyone of their right to financial privacy.

Those worries might not be so unfounded. The Organization for Economic Cooperation and Development (OECD) is an international economic coalition of 34 countries dedicated to supporting free markets and coordinating domestic and international policies affecting its member countries. In 2014, the OECD stepped into the arena with an even wider ranging version of FATCA: the Global Account Tax Compliance Act, which would ensure reciprocal sharing of tax and account information among all participating nations.

To date, representatives of 51 countries have signed off on GATCA, which affects citizens of any participating country with holdings in any other participating country, not just the US. And while worried citizens can still find places that haven’t signed off on either FATCA or GATCA for their money, that’s getting harder and harder to do.

The creators of both laws claim that they’re aimed at eliminating tax fraud and returning missing tax revenues to their rightful owner: the government. And, they say, individuals and corporations doing legitimate business abroad won’t be penalized. But whether an accountholder is using offshore financial institutions for purposes legal or illegal, the larger concern of loss of privacy remains.

As a recent article from International Man points out, these laws, along with recent disclosures about domestic spying and other government efforts to hack financial data, have essentially stripped everyone of privacy in their financial dealings, if those dealings involve money, stocks or other kinds of investment assets. But there’s one kind of asset that still offers the kind of privacy ad security formerly promised by Swiss bank accounts: real estate.

Foreign real estate remains the one kind of asset that allows investors to evade FATCA and the like. As Jason Hartman always advises, it’s a hard asset that appreciates over time – and ownership doesn’t have to be reported to tax authorities.

Income generated by the property does, however. And that’s a major consideration for investors hoping to generate wealth from their holdings. But used simply as an alternative to traditional bank accounts, ownership of foreign real estate by individuals is not reportable to the IRS. It also can’t be confiscated or frozen like a bank account.

Government efforts to breach the privacy of individual and business financial doings aren’t new, and they aren’t always legal either. But the increasing acceptance of the US-based FATCA and the OECD’s GATCA are making those efforts entirely legal on a global scale. For securing assets and holding onto privacy, foreign real estate may become the new offshore bank account

No more real estate agents? In the brave new world of real estate, agents, brokers and just about every other part of the traditional way of buying and selling property could be going the way of the dinosaur, thanks to innovations in virtual reality and artificial intelligence technologies.

Online access and social media have already brought big changes to the world of real estate. Most real estate agents and other professionals involved in real estate transactions do business online, and Internet listings bring buyers and sellers together from all over the world. Online listings can also feature photo galleries and virtual tours offering video walk throughs of properties up for sale.

Add to that the reach of social media. Buyers and sellers can connect on Facebook, get real time updates from their agents vie Twitter, and mobile devices let all parties stay connected all the time.

Those tools have already marginalized whole groups of real estate professionals, as buyers and sellers are more and more able to conduct business themselves. But as a recent Forbes article notes, the next generation of these technologies have the power to affect how the world does business in many ways. And the widespread application of VR and related technologies on the real estate market could end up not just marginalizing, but also virtually eliminating, these “middlemen (and women)” altogether.

The notion of the virtual home tour isn’t particularly new. A number of companies have been offering that kind of experience for some time, using video to capture detailed views of property up for sale. Prospective buyers can then contact sellers or their agents to go further.

But the next generation of virtual reality technology takes that concept to new heights. Thanks to new applications developed by Sony, Microsoft and a number of other heavy hitters in digital innovation, it’s now possible to virtually be present in a particular place – even if you’re hundreds of miles away.

New imaging technology also makes it possible to "try on” new hairstyles, glasses and even faces prior to plastic surgery. And within the next few years, applying that kind of technology to real estate could produce the ultimate in virtual home touring.

Applying VR technology to the world of real estate has the potential for bringing buyers and sellers together in ways that essentially eliminate the need for a third party such as a real estate agent or a broker. As they can now, prospective buyers would be able to browse home listings anytime, from their own homes – but thanks to sophisticated VR applications, they’d be able to ”visit" the property and see any parts of it that interests them, rather than view a pre-recorded video tour.

What’s more, the new generation of VR tech would allow them to customize their experience. Just as it’s now possible to upload a photo of yourself and preview new glasses and new noses, prospective homebuyers could upload images of their furniture or wall hangings to virtually try them out in the home under consideration.

They’d also be able to virtually paint the house, preview landscaping options and add features like a pool. With unlimited time and options to choose, potential buyers would learn more about the house and its potential than a physical tour with an agent could ever offer.

Many of those options are made possible by advances in artificial intelligence. AI technology gives us “smart” devices and apps of many kinds, from options to remember our passwords to simple recommendation technology that offers new choices based on a user’s previous purchases or selections.

Applied to virtual reality driven online real estate listings, the platform could offer browsers more listings based on their previous searches and customize them with a user’s preferred features. If someone’s ready to buy, the interface could allow users to place a bid, contact a seller, and conduct most pieces of the transaction without ever leaving the site.

With some aspects of the new tech already in place for other applications, the new world of real estate could arrive within the next couple of years. It may be premature to count out agents, brokers and mortgage managers completely. But the new world of virtual reality and AI technology has the potential to put control over the transaction in the hands of buyers and sellers and eliminate dependence on “experts” who may be incompetent or downright criminal. And that, as Jason Hartman says, is the cornerstone of smart investing.